All Forum Posts by: Bill Rich

@Julius Johnson No problem at all. 

 There are no restrictions on ownership for you can do a refinance as a 203k as well. Yes the 203k can be used to add value, in fact, in most cases you are adding value and equity. 

In Texas, the one thing you you need to be aware of, is that the contractor will need to be at your closing as well (even for a refinance) for he/she will need to sign some of the mortgage docs as well. That is a Texas law, fyi. I have done many in Texas and can set you up with a HUD consultant as well.

Utilities do not need to be on at all for the HomeStyle or 203k. I am not sure what Homewise is but think you meant HomeStyle. Any one can qualify for the programs as long as they meet the credit requirements. 

 This isn't the norm at all Ronnetha. This lender sounds like they weren't well versed in the program. 

@Dan Weber I hate to say but what you experienced is not the norm, at least from my perspective.  As the lender we do not want you funding any of the project yourself and will due as many draws as necessary to keep the project liquid for the GC.  That is for both the 203K and the HomeStyle. 

@Julius Johnson with every loan there are pros and cons. The loan is the best fit for your situation is how you should approach it. If you have a lower credit score the 203K would be a better option. As an example we require a 620 FICO for the HomeStyle where as for the 203K we go down to a 580. In terms of the DTI (debt to income ratio) FHA is more friendly for a higher DTI borrower. If you are looking at multi-family homes the 203K is only going to require 3.5% down but the HomeStyle requires at least 15% down (2 family) and higher if its a 3 or 4 family. I close roughly 75-90 203Ks and HomeStyles per year and would be happy to answer any questions you have.

Thank you and good luck!!

@Brandon Dubisky 

Congrats Brandon on your steps into the rehab world. As you have already been told the biggest thing to make sure of is that you are working with an experienced lender in the renovation field. Personally, I have closed several hundred 203Ks and HomeStyles and I would make sure the person that you choose has closed at least 100 in the past 2 years for these programs are more complex then that of a regular mortgage. So your loan officer needs to be abreast of all the changes that come along from time to time. I do have several on going rehab projects in Alabama as well so I can help to connect with a local HUD consultant. If you have any questions please feel free to reach out.

I meant the lender can call the loan due if FHA deems there was occupancy fraud refuses to insure the loan.

@Greg H. no, FHA can call the loan due if there are grounds for fraud. I have seen it first hand and its far more than .001%. Working in the mortgage industry for nearly 15 years, I have talked to many entities and individuals about this including people at HUD.

@Antonio Flue 

I am sorry but your advice is not good advice at all. This has nothing at all to do with FHA's flipping rules as he could sell the house right away with absolutely no risk or legal issues. The FHA affidavit requires you to live in the home for first 12 months the home is owned. If its sold then the rule does not apply. FHA flip rules have to do with a buyer and the buyers ability to secure financing on the property being sold. If @Account Closed were to refinance out of the FHA loan and into a conventional loan as an investment property then he would be fine as well and he would not be caught doing anything.  He is simply honoring the requirements of the loan.  Your friend who got caught did something else that led to the action.  

As for your comment about FHA not doing anything. That could not be more wrong. FHA will send agents to do door knock audits to ensure you are living in the home. If they deem you are not living there they can file a report with the FBI and the FBI could pursue the mortgage fraud claim and FHA will call the loan due immediately. FHA also does allow you to buy homes that need work using the 203K and this is not a hard program at all. In fact its quite easy as I originate 70-80 of these loans per year.

If I could give a little advise, and please do not take this the wrong way, leave the mortgage advise to the professionals for what you advised could get a person into more trouble.

@Kirk unless there is a bonefide reason to go from a single family to a multi family, like increase in family or work relocation, no shot.